Coronavirus and Budget 2020, Episode 66 (28/2/20)

IDEAS Radio 28 February 2020

Coronavirus and Budget 2020

Aghogho Oboh: Alright, it is … thirteen minutes past four, hot and humid day.  It did not begin exactly like that, because of the rain that did happen in some parts of the Island.  This is Public Square, and where we’re discussing all the big and important issues in the country.  We’ll begin with the IDEAS segment in the Public Square with Ayo Obe.  And today is a discussion which has began all through the early hours of this morning when the Corona virus confirmation in Nigeria the breaking … and I’m sure you’ve been following all the conversation on the different shows on Nigeria Info, and on the Public Square it will be taking centre stage together with the 2020 Budget analysis.  All of that tied in together.  BudgIT is here with us.  Remember, you can follow the conversation on social media on Twitter @NigeriaInfoFM, @ideasradiong, @RotimiSankore, @AghoghoOboh, @naijama.  So many handles, all of them you can tweet at.  If we get … when we get them, we will let you know.  On WhatsApp too, 08095975805 send your messages there, beginning from now.  Good evening Ayo, good evening Rotimi.

Ayo Obe: Good evening Aghogho

Rotimi Sankore: Good evening!

AO: And good evening everybody in the studio, because we’ve got a lot to discuss.  Obviously what I really wanted to discuss with you guys from BudgIT, Damilola and Olaniyi, are some of the IDEAS issues that arise from the Budget, but I thought that in light of the disclosure, or the confirmation as Aghogho said, that we have a confirmed case of Coronavirus in the country, that there are some IDEAS issues that arise before we get to the budgetary aspect of it.  Because, I mean, I was listening to the radio this morning, and I don’t know if you know that Nigeria’s obviously not the first country to have this … have a confirmed case …  Aghogho, I’m looking at you using your hand sanitizer there.

AgO: Ha ha ha ha ha … Rotimi taught me.

AO: And the thing that … looking at the way that countries around the world have been reacting, two countries struck me (and they are two countries that are – in other respects – almost diametrically opposed): one was the case in Iran, where a member of the cabinet – I believe the minister in charge of health matters – had … was said to have been affected with the Corona …

RS: Deputy Minister of Health.

AO: Yeah, the Deputy Minister for … was said to have been infected with the Corona …

RS: That was the spokesperson and the Vice President.

AO: … virus.  And what was interesting was that the reaction of Iranian citizens was: Oh yeah?  Do we … is that true?  Can we believe this person?  And why is that?  That is because there has been a loss of trust between the Iranian people and their government.  It’s not new, but the icing on the cake for them was when a plane was shot out of the air – by mistake quite alright – but shot out of the air by the Iranian Armed Forces, and the government was lying about it.  And then they had to come clean, and then people said: So our government can lie like this!  And on the other side of the world, is the United States, assuring people that: No, this our President whose statements are always being fact checked for truth and for any relationship with reality, is not going to be in charge of our response to Corona virus, it’s going to be the Vice President.  So … and it tells me that … and you might say to yourself: Well why does it matter if people believe or don’t believe?  But we’re asking a lot of people when we say that we need to be responding as a nation to the Corona virus.  And if people are sort of doubting everything that government says, doubting whether they …  I mean, from the beginning they were on top of … they said they were on top of the matter, and people were doubting them.  And then the Chair of the Economic and Financial Crimes Commission was reported as saying that the virus is caused by corruption.  Now, most people felt that … it’s a strange thing to say, but unfortunately his organisation said: No, what he meant was that the effect would be worse than, or as bad as corruption.  And then they tried to put some spin on it, and they were busy dressing it up, and people were bringing out the tape and saying: But this is what the man said.  If he meant to say something else, then he should say … he can say: Oh, my words … tongue twisted, I meant to say …  But they were busy putting out this story!  And he was … then he came out and said: Yes, it’s caused by corruption (because there was now somewhere else that somebody had said …) and the point is that it seems to me  the end result of all this is to say that: What is these … What are these people saying that is the truth?  And I think it’s an important factor, because you’ve seen the situation in some cities in China.  A whole city closed off and shut down: that demands a tremendous amount of sacrifice on the part of the people.  In Japan, schools closed for a month.  You’re a parent.  You have to go to work.  What do you do?  You just … because if we were to have to implement such a measure here in Nigeria, you can imagine, you’d … the reason why you’re not sending your child to school is so that they don’t mix with other people and carry the virus back and forth, but if you’re a working parent, what’s your immediate recourse going to be?  Baby nurse, baby care centre, and so on, and if you’re not going to be able to resort to that, what is it?  I mean I saw on my Twitter feed today, a statement that somebody who said he was the Über driver who had driven the infected Italian from the airport was afraid to come forward.  Of course, some jokers came out and thought it was funny to say: I’m the Über driver and I haven’t … but … I thought to myself: Yes, why wouldn’t he be concerned?  Because you and I might think the obvious thing for him to do is to stop driving people around in his Über car which was filled with infected Italian five minutes ago.  But he might be thinking: If I do that, what … who’s going to replace my lost earnings? …  And so I think that when government does not have the trust (because to me that trust is an Integrity and Ethics idea, an issue, an issue of Ethics and Integrity) then we have a problem.  But I think beyond those immediate issues of trust, it’s also a question of, when the Government says: We are ready, in what way are we ready?  What is the input?  Because we can talk about countries like Japan and others, and say: Well, they too have!  It doesn’t mean to say that we are useless or that it’s all a political … party political matter, but countries like Japan, their health care system, the amount that they spend on healthcare is a great deal more, even as a percentage of their budget, than we do.  And I hope that that’s a fairly neat segue into the discussion on the Budget and the spending transparency that our government says it wants to bring to bear on matters of public finance.  

So I’m turning over to Olaniyi and Damilola, after my monologue, or rant, depending on what you want to call it, to say that: Do we have actually have any figures to show … and I do appreciate that primary care is a matter for Local Governments and States (and I say ‘States’ because States are so often squatting over what the local government should have, that it prac… , it effectively becomes their job) but do we have any figures to show what our Federal Government is planning to spend on health in the Budget?

Olaniyi Olaleye: Yeah, we have, but … I think in a case like these things, government did not, was not expecting things like this will happen, there are always some kind of fund …

RS: Was not …

AO: … expecting

OO: Was not expecting.

RS: Really?

OO:  … Yes, like make allocation for it in the 2020 Budget.  So cases like this are mostly emergency cases, that a special intervention fund … 

RS: Governments don’t expect public health emergencies?

OO: So, they …

AO: Well, they have a Centre for Disease Control.

OO: Yeah, they have incentives, it’s always like a special … but not a particular, amount of money that will be used for emergencies.  But if you look at the 2020 budget for instance, we see that proper allocation is not even in the Health Ministry, compared to what Nigeria signed in 2001, in the Abuja Declaration, that states in Africa have to commit about 15-20% of their total budget to Health.  But Nigeria over the years has not even done more than 6%.  So if you also look at … 

AO: Is that the Federal, or … ?

OO: Yes, the Federal Government

AO: And including the States …?

OO: No, just the Federal Government budget.  In this 2020 budget, the Federal Government has less than 6% of health, total Budget.  So if you also look at the health institutions in Nigeria from the primary health care centre, from the primary, secondary and the tertiary institutions, you will notice that the primary health care set up is actually non-existent.  Because from the Local Government structure in Nigeria where the State Governments have actually amassed the power that is going to the Local Government.  So if the Local Government system is not even structured, there is no how allocation of funds will go to the Local Government.  If you look at the secondary health institutions like the General Hospitals, you will see that there are little amount of … concentrations to that.  People that are supposed to go to primary health care centre go to tertiary institutions like the Teaching Hospitals, even cases that should have been treated at the level of the primary.  So the primary health care institutions got overwhelmed, because the focus are supposed to be at the primary level.  So even at the tertiary you will see … doctors complaining that they have too much of patients, even cases little cases that should have been treated in primary level, … so even in the 2020 Budget, less attention has been given to health, in education and things like that.  So over the last ten years, government has … the total health expenditure of the Federal Government is about $10 billion.  Out of the $10 billion, $7.6 billion has also been from individual pockets.

AO: Ok … 

OO: Out of the total health expenditure in the last ten years.

AO: … that’s us as private individuals spending on our own health

OO: Private individuals.  Private individuals has even spent up to $7 billion over the past ten years.

RS: What is known as ‘out of pocket’.

OO: Out of pocket.  So if you go to the donor funds, money coming from the foreign  agencies, foreign agencies have spent nothing less than over $1 billion dollars.  So the total amount of money the Federal Government has even spent on health over the last ten years, both donor money and individual pocket, is not actually more than …

AO: And what does the 2020 Budget with its own figures, does it tell us anything?  Is there anything that we learn from the alleged transparency, if there is in fact transparency?

OO: Yes, if you look at the 2020 Budget, of health, you will see that even recurrent expenditure is actually taking more than capital.  Over 85% of the Budget will be used to pay salaries and overheads.

AO: But isn’t it, don’t we actually need health personnel … properly trained people?  I mean, I appreciate that we need to …

OO: These are the issues of the health set up, because nobody is even talking about the 50% of almost Nigerians who are travelling abroad to practise.  So those are the issues in our health care system.

RS: But even then, we don’t have enough.

OO: We don’t have enough.  But even the ones we have are travelling abroad to study.

AO: But the point is that if we don’t spend … I mean, if we’re complaining that we are spending too much on our recurrent costs, and one of the things that makes us not want to, makes those who qualify as doctors not want to stay in the country, is poor pay, then we’re going to have to …

RS: And poor working conditions,

AO: … spend more money on their …

OO:  Yes, the capital expenditure is also part, because if you … it’s not only about poor pay that is one of the issues people are … that doctors, are travelling abroad, there are also issues of lack of basic tools to use in the hospital.

AO: And the support personnel.

OO: Yes, and the support personnel, even the conditions of the hospitals.  So those are the discouraging things the doctors are facing in the hospital for them to travel abroad to practise.  So if the capital expenditure of the government is low and the recurrent expenditure even takes more than the capital, it is the capital expenditure that will be used to build infrastructure in the health institutions.  So the capital expenditure is just about 20% of the total budget on health.

AO: Do we see anything, I mean, I keep on coming back to this issue of Open Budget Transparency as the President promised in government expenditure.  Do we actually see what they’re spending this money on, the little capital expenditure that they do spend?

OO: Yes, the only thing we have is the Open Treasury Platform which the Federal Government launched for the ministries to be declaring what they spent money on, but presently, they’ve not even …

AO: No the Accountant General, Ahmad Idris, he actually said that: Oh no, no, no, no, no!  We’re not ready yet, we still have to train …

OO: Personnel

AO: … people, and …

OO: So even if you look at the Open Treasury, the only figures available is 2018 upwards.  So the trend from 2015, or even let’s say from 1999 is not even available on the Open Treasury.

AgO: Alright, so let’s take a quick break, when we come back, we’ll continue on the IDEAS segment in the Public Square.  Please don’t go anywhere.


AgO: Alright, welcome back on Public Square.  Back to Ayo Obe on the IDEAS segment.

AO: Thank you Aghogho.  I just wanted to – before I close out the IDEAS segment – because obviously Corona virus is on everybody’s mind, and whether we are spending enough to get ready for it … well it’s a bit late now anyway.  But I also thought that we should consider some of the IDEAS issues in the whole … in the Budget, and I do know that you at BudgIT are coming out with a report on the Budget.  And there are just a couple of questions that occurred to me.  Firstly is the Government making a great deal of … patting itself on the back over the fact that a smaller proportion of the Nigeria’s … or the income that it has, now comes from oil, than before.  And I wonder, is that reflected in this Budget?  And is the … is it that we’re really making more money, or is it that we’re borrowing, or how is it that we’re getting less from oil?  Or is it just that the price of oil has sunk so low that it’s bound to be a smaller percentage of the national income?

OO: Ok, if we have to look at the Budget Implementation Report of 2019, I think the oil performance only accounts for about 52%.  Performance of 52%, so …

AO: Now why is that though?  What’s the other 48% made of?  Is it from government making more money in Nigeria, or is it because it’s borrowing?  

OO: Yes, it’s basically on oil production.  If government meets its oil production target, then we see a significant improvement when it comes to oil revenue and also, it’s also determinant on the oil price.   Like presently in 2020 and the Federal Government proposed  projected oil price as $57 but right now, the oil price on the international market is about $54, so that means that the 2020 budget will perform below expectation when it comes to the end of the fiscal year, because oil price in the, oil price right now in the financial market is $54 and we had already projected $57.

AO: But even apart from the money that government is getting from oil, there’s a … even by its own Budget, it’s expecting 48% of its income from non-oil sources, and I’m wondering what those non-oil sources are.

OO: Government is expecting 1.81 trillion from the non-oil sector and from other revenue that the Government that takes …

AO: What I’m saying is that: Is it Customs, is it VAT, is it borrowing …?

OO: Yes, the non-oil revenue component  is from Customs, from Corporate Income Tax, from independent revenue.  Independent revenues are from independent agencies of government such as NNPC and Federal Inland Revenue Service.  But the shock is the biggest chunk of this revenue, which Government claimed is “other sources” which is about 3.97 trillion.

AO: And what is that?

OO: They call it other revenue sources

AO: Yes, but what is that?  Is it borrowing, or …?

OO: Yes it’s signature bonuses, from grant, or …  from grants and signature bonuses, so these are et ceteras.  So Government is projecting about 3.97 from that sector, because the …

AO: I guess what I’m trying to find out from you is that … because … and this is to me, is where the issues of Integrity and Ethics … and generally, if you say you’re going to be open, the government should be open.  What I’m trying to find out, is that: This other money, is it money that we’re going to have to be accounting … that we the people are going to have to be accountable for later, because government is borrowing to make up this money, or is it just … is it money coming from these other sources, but it’s not a millstone round the neck of future generations?

OO: A part of the struggle of the Federal Government to increase revenue, we’ve already seen it, is the VAT, the Public Finance Bill that was introduced …

AO: So it’s not borrowed money, it’s just taxes?

OO: No, it’s not borrowed money.  It’s just taxes, it’s even part …  Instead of the government to be taxing from a weak economy they are supposed to actually develop the potentials of economic growth.  Instead of borrowing, instead of taxing a weak economy.  So we see government increasing VAT from 5% to 7.5% that’s part of that, and the deficit of the budget, because the Budget is about 10.59 trillion, and the Government has revenue, sources of  projected revenue of 8 trillion, so has one trillion Budget deficit which will be financed through borrowings. 

AO: It will be coming from borrowing?

OO: So if you look at the ratio of the Federal Government income to the debt servicing, you see that debt servicing is taking over 20% of the Federal Government’s revenue, so as Government is making money also, they are also using the same money to service debt.

AO: And I guess that from my IDEAS, or the Accountability point of view, where does the other shoe drop at the end of the day?  Does it drop on the … on people, with more taxes, when we’re already bowed … or how does it work?

OO: Ok, I think the basic thing about it, let’s just look at the capital expenditure which we believe directly impact the lives of the people.  So capital expenditure is where people really feel the impact of a budget, we talk about oil revenue, personnel costs talk about non-debt expenditure, people don’t really care about things like that, but when it comes to capital expenditure, that’s where people really feel the feel the impact because that’s the money that we use to build … the building of roads, building of hospitals, building of schools.  So if you now look at …

AO: Mmmm, but if the schools are not full of teachers, if the …

OO: That’s where I’m going to, because if you look at component of the capital expenditure to total budget, you’ll see that government is even spending less  on capital expenditure.

AO: No, I appreciate that, but I think that … I’m still coming back to this point, because it’s a question that the expenditure on recurrent is not necessarily ipso facto, or I’m asking: Is it ipso facto bad?  I mean, just to take an example: every day, Government likes to come out and talk about the low figures we have for low  for police officer to number of the population, and that we need to increase this.  And on the other hand, we have the Oronsaye report for example, saying that we need to reduce the civil service.  And my question is that: If we  increase the number of police officers without training them and then we give them expensive equipment, and the first responder at the scene of the crime or wherever it is, has just been recruited without training and without the investment in that person, and then they go trampling all over the crime scene, then does it really help us?  So I think that we certainly see that the proportion is not right, but how do we actually respond to the competing demands?

OO: To my own opinion if you look at the security budget, you see the total security budget is even taking over 30% of the total Budget.

AO: I mean even within the security budget, the proportion that is being spent on capital …

OO: The proportion that is being spent on recurrent is even more than capital.

AO: That’s what I’m saying.  So what I’m saying (or what I’m asking I should say) is that even within the over bloated security budget we are spending more on recurrent, and people are still complaining as if a police officer descends from heaven fully formed and trained, that we need more of them.  That it seems as if we are in a somewhat vicious circle, because even within that bloated budget, we are spending so much more on personnel than on capital expenditure, whether it’s decent police stations, whether it’s proper crime labs and so on and so forth.

OO: Ok, I think the issue boils down to issue of transparency and Accountability when it comes to budget expenditure in Nigeria.

AO: But security is always shrouded in “Ooh, we can’t tell anybody!”

OO: Security expenditures, they believe these are classified informations.  And so … I think it boils down to issue of Accountability because you’ll see bloated budgets of Federal Government allocation without even knowing the amount disbursed for this allocation.  So even if you see for Ministry of Defence was given over N900 billion budget, then how much was later given to this agency to perform its functions?  So those are the first questions.  Government should release budget implementation report  every quarter, but it has never been broken down per agency, which they wants to achieve now with the Open Treasury.  So I think that when we see how much was released to this agency, that will now tell us ok, government is really spending money on this particular Ministry, because allocation does not actually mean funds were actually released for it.

AO: So I want to thank you Olaniyi.  I guess that in closing off the IDEAS segment, that essentially, the big promise of the Open Treasury that the government announced with a lot of fanfare, well in arrear … well behind other sister African countries, is still not yet meeting the purpose that it was established for, and that therefore, the question of Accountability still remains very much in the air.  So I want to thank you very much for coming on to the IDEAS segment of the programme, and hand it back to Rotimi and Aghogho.

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